Inconsistency in price of cooking gas: NLNG blames faulty supply chain

The Nigeria LNG Ltd (NLNG) has identified market dynamics and faulty supply chain as reasons for the inconsistency in the price of cooking gas in the country.

Cooking gas is also known as Liquefied Petroleum Gas (LPG).

Mr Tony Attah, the Managing Director of the company, stated this on Tuesday when the Minister of Information and Culture, Alhaji Lai Mohammed paid a visit to the NLNG plant complex in Bonny, Rivers.

Attah who said that the company contributes 250,000 tonnes of LPG, which is 40 per cent of the total domestic cooking gas needed in the country, stressed that at no time has it increased its price.

“The pricing of LPG is basically on the market dynamic of the downstream of NLNG operation.

“We make the gas available but we are not unaware of some of the vagaries of LPG market.

“The reality is that there is the need to change the dynamics of the supply chain of LPG.

“We produce the LPG in Bonny and ship it to Lagos which is the only receiving point today.

“The same gas from Bonny is now put on trucks and brought down to Port Harcourt as well as other parts of the country for the end users.

“Definitely there is something wrong with the supply chain.

“The value chain is not efficient and the inconsistent pricing is as a result of some of the vagaries of the market.

“We did not increase our price, our price remains the same and we will continue to increase volume to bring down the demand pressure,’’ he said.

Newsverge reports that early December 2016 to January this year, LPG which hitherto sells for about N3,700 for 12.5 Kg increased to about N7,000.

Newsverge reports that the 12.5 kg of LPG currently sells for about N5000.

Attah recalled that in 2007, the country had supply of only 50,000 tonness of LPG per year and NLNG was invited to help.

He said that at the time, most of the LPG from the plant was for export.

The managing director said upon the invitation, the company responded to the chronic supply shortage with about 100,000 tonnes, moving the country to about 150,000 tonnes per year.

He said in 2016, the supply was raised with additional 100,000 tonnes which moved the country to 250,000 tonnes being about 40 per cent of domestic LPG supply.

The NLNG boss said that the major markets for the company’s products – LNG, LPG and Condensate – were Europe, South America, Gulf of Mexico, Japan, South Korea, Taiwan China, Thailand and India.

He said at the inception of the company in 1989, 35 per cent of its market was in the US.

Attah said that with Shale gas discovery, the U.S. which they were exporting LNG to is now an exporter of same product.

Attah noted that Nigeria did not have a deficit of gas with its 187 trillion cubic feet (TCF) of proven gas reserves and 600TCF of unproven gas reserves, enough for domestic and export needs.

He noted that the company which currently operates six trains (production lines) has the desire to put two more (trains seven and eight) on the stream.

He therefore called for the development of the proven gas reserves to feed the NLNG trains for production of LPG and LNG for domestic market and exportation.

On the operation of the company, he said they buy warm gas in warm state, which they used the factory’s lines to cool down to produce LPG, LNG and Natural Gas Liquids.

“In a lay man terms we buy gas in its warm state and cool it down to minus 162 degree.

“The train is like a big freezer that takes in gas in its warm state and cools it down to become liquid.

“The lines clean up the warm gas of impurities to produce LNG, LPG and condensate for domestic use and exportation,’’ he said.